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Comment by arghwhat | Hacker News Reader

I imagine it's a horribly stressful problem to have with significant taxation and legal work to follow to figure out what to do with it, if anything at all...

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> I imagine it's a horribly stressful problem to have with significant taxation and legal work

Absolutely this !

In this day and age, the last thing you want is a large chunk of money turning up on your doorstep whose origins you cannot account for.

Its bad enough when you can prove the origins and you have to provide all the audit trail documentation. Ask anyone in the financial sector who has had to deal with compliance questions landing in their Inbox about a client's source of wealth.

When you can't prove the origins, well, "not a good look" as the old saying goes.

Hmm, the sad aspect of ownerless currency. In these kinds of situations you need to be able to prove the funds didn't fall off the back of a truck, both in order to be able to use them in the present, and to viably tie them into the timeline in the long term.

Maybe I'm being naïve and idealistic, but I would think an open source project would have a much easier time of navigating this than a private individual. Open source projects are built off of donations of both money and time. As for what is being returned, the project itself existing helps enable many businesses leading to many people becoming rich. As for expenditures, large open source projects are open with how they spend their money, so where the money ends up going is easy to see as well. There is far less ability for something nefarious to be going on for why a person is being paid.

Banks want KYC information, even for donations, esp when its in these amounts.

I don't see a problem. Of course banks want KYC, but that doesn't stop you from selling the crypto on e.g. Coinbase (also KYC'ed) and sending to your bank.

If you deposit a quarter million dollars into your bank account out of the blue the bank are absolutely going to ask you where it came from, and "don't worry yourself with that", or even "I sold some crypto" are unlikely to be sufficient answer to avoid your account being frozen and a note sent to the relevant authorities.

>or even "I sold some crypto" are unlikely to be sufficient answer to avoid your account being frozen

For 99% of banks, you'd be totally wrong about that.

> a note sent to the relevant authorities.

This, of course, means literally nothing. Banks will "send a note" for just about any reason. This results in said authorities drowning under a mountain of millions of pointless suspicious activity reports.

> If you deposit a quarter million dollars into your bank account out of the blue the bank are absolutely going to ask you where it came from,

I've deposited a larger lump sum into a US bank account and was never asked where it came from. I was then able to use that money the same day to pay off a loan.

What they actually tend to do is have someone in management call to congratulate you and invite you to discuss banking products. I know this from personal experience.

In the worst case your funds would be frozen for a couple months then you’d get a letter saying we are closing your account for compliance reasons and attached would be a cashiers check for the balance of your account. Then they’d file a SAR that would get put in a queue behind the millions of others because the government only reads a small fraction of them.

Large open source projects are set up as legal entities like corporations or foundations.

But a small open source project doesn’t exist in the eyes of the law. In a way it’s the worst of both worlds if you’re doing non-profit-like things such as receiving large donations, but operating as a private person.

> In this day and age, the last thing you want is a large chunk of money turning up on your doorstep whose origins you cannot account for.

If it was physical cash turning up on my physical doorstep, I certainly wouldn't mind :)

I dunno, I feel like if I walked outside and there was just a bag of cash out there, I'd be pretty hesitant to touch it. People generally don't just "lose" large amounts of cash, and may want it back.

This is almost literally the plot of the movie A Simple Plan, amusingly, and many of the same stresses apply.

If this is indeed from Tornado Cash, which is OFAC-designated, to an individual in the US, as seems to be the case, then the tax implications seem like the smaller legal problem. It would appear that even if the developer doesn't touch the funds, they need to make a report within 10 days to OFAC.

Honestly, this seems quite a bit like someone is trying to donate dirty money after being unable to launder it for their own use.

You believe that it is illegal to merely accept money from someone you believe to be a sanctions violator? Could you expand on that theory?

It is not illegal to sell a house to a known drug dealer, and neither is it illegal to accept a donation from a drug dealer. Why do you think this situation would be different?

If it's interpreted as accepting money for some implied services (future or past), then that could be an issue if the law prohibits people under US jurisdiction to provide any services to them.

In this case the donor would merely be a sanctions violator, while tornado.cash is sanctioned. So the money isn't coming directly from a sanctioned entity.

I was reading and I think 18 USC 1957 may be a problem.

> Whoever, in any of the circumstances set forth in subsection (d), knowingly engages or attempts to engage in a monetary transaction in criminally derived property of a value greater than $10,000 and is derived from specified unlawful activity, shall be punished as provided in subsection (b).

The withdrawal from Tornado Cash after the sanctions were imposed is the specified unlawful activity (IEEPA violation).

Even if the withdrawal itself was legal (the person who withdrew the money was not a US person), the government could argue that he should have known the funds could have came from some crime, i.e:

> In a prosecution for an offense under this section, the Government is not required to prove the defendant knew that the offense from which the criminally derived property was derived was specified unlawful activity.

> Even if the withdrawal itself was legal (the person who withdrew the money was not a US person), the government could argue that he should have known the funds could have came from some crime, i.e:

I think you’re misreading that. The Government has to prove that the defendant knew that the property was criminally derived, but the government does not have to prove that the defendant was aware of the list of specific unlawful activities.

You’re right I misread that. I still think an overzealous prosecutor could find some violation, especially if p2p exchanges are used. They have charged people with operating an unlicensed money transmitter for merely being a customer of an unlicensed money transmitter!

What you're saying is that, as the address the developer received the money from was not specifically listed by OFAC as Tornado Cash (in [1]), it wouldn't be a prohibited transaction for the developer that would need reporting, even though it seems like it was just transferred from 0xA160cdAB225685dA1d56aa342Ad8841c3b53f291 (on the SDN list from OFAC) a few minutes before through a few addresses? I don't really know, but if that were the case, that seems like it would enormously limit the applicability of the sanctions?

[1] https://sanctionssearch.ofac.treas.gov/Details.aspx?id=38499

What's the alternative? Sanctions don't permanently taint money.

Yeah I can imagine how a team suddenly has to deal with money issues and the potential emotional responses/ maybe expectations or disagreements.

That’s a big change for some teams possibly?

Like a job?

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